Pharmacy Linked to Meningitis Outbreak Files for Bankruptcy

Published December 21, 2012

Reuters

The pharmacy linked to a deadly U.S. meningitis outbreak said on Friday it filed for Chapter 11 bankruptcy protection.

New England Compounding Center, the specialty pharmacy shut down after shipping tainted vials of a steroid, said it will seek to establish a fund to compensate meningitis victims. NECC, based in Framingham, Massachusetts, said it made the filing in U.S. Bankruptcy Court for the District of Massachusetts.

According to the Centers for Disease Control and Prevention, 39 people have died and more than 600 have been injured from injections of methylprednisolone acetate, a drug typically used to ease back pain.

NECC shipped the drug to medical facilities throughout the United States.

The company said in a statement that it has filed papers with the court to pursue a greater, quicker payout to its creditors than they could achieve through piecemeal litigation.

NECC also announced the appointment of Keith Lowey as NECC's independent director and chief restructuring officer. He will oversee setting up a compensation fund.

"We want to assemble a substantial fund, and then distribute it fairly and efficiently to those who are entitled to relief," Lowey said in a statement.

NECC's bankruptcy counsel is Daniel Cohn of Murtha Cullina LLP.

Before the deadly outbreak, NECC escaped harsh punishment from health regulators several times in the years leading up to the health crisis that has raised questions about oversight of the customized drug mixing industry, Massachusetts records show.

Problems at NECC date as far back as 1999, the year after it began operations, according to hundreds of pages of documents obtained under a Freedom of Information Act request.

And the documents show regulators refraining from the harshest sanctions available to them, even as the list of complaints against NECC continued to grow.

The documents came to light after steroid shots from NECC were given to thousands of patients across the country.

Among the reported problems was a company official handing out blank prescriptions. And an outside evaluation firm found inadequate documentation and inadequate process controls involving sterilization at NECC in 2006, the documents show.